National Flood Insurance Program Gets Borrowing Boost

Congress has passed and sent to President Obama legislation that increases the borrowing authority for the National Flood Insurance Program by one-third.

The House passed the legislation Thursday through expedited procedures that required a two-thirds vote; the Senate acted several hours later by unanimous consent.

The House vote was 354-67. All “nay” votes came from Republicans, another sign of unrest from conservatives upset that the “fiscal cliff” deal approved earlier this week did not call for enough cuts in the federal budget. All 192 House Democrats who voted supported the bill.

"No" votes included Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee. He told The Hill after the vote that Washington should not be creating new debt.

And, during the debate, other Republicans noted that the NFIP only takes in about 70 cents of the money it pays out in claims.

"This legislation proposes to increase the program's borrowing authority by $9.7 billion," Ryan said. "It would be irresponsible to raise an insolvent program's debt ceiling without making the necessary reforms."

Rep. Jeb Hensarling (R-Texas), incoming chairman of the House Financial Services Committee, made the same point during the debate. “For the victims who paid for flood insurance policies with the National Flood Insurance Program, their claims need to be paid – and paid now.”

But, he said, the NFIP “is beyond broke – it is taxpayer-bailout broke.”

He said his committee will mark up a bill this year “to transition to a private, innovative, competitive, sustainable flood insurance market.”

He said that is needed to ensure that “taxpayer bailouts are never needed again” and to get NFIP “on a path towards actuarial soundness.” He acknowledged that some reforms were imposed through the NFIP reauthorization legislation enacted in July, but said that despite those reforms “Sandy has hit before many of these provisions could take effect.”

To defend themselves from the withering attack from Northeast members of the Republican caucus, the Republican leadership sent Rep. Scott Garrett (R-N.J.), a House Financial Services subcommittee chairman, to manage the debate and sponsor the legislation.

Caught in the middle between seething Republicans who for the most part voted against the legislation averting the fiscal cliff, Garrett urged “volunteers” from across the country to come to New Jersey, New York and other Northeast states hit by Sandy to aid victims.

But, he acknowledged that, “As someone who has been on the ground, viewed the devastation, and helped clean up some of the damage, I certainly believe that those who have bought flood insurance should expect to receive the coverage they paid for,” Garrett said.

The bill is H.R. 41. It increases the borrowing authority of the NFIP to $30.425 billion from $20.775 billion.

The legislation is a bare-bones concession from the House Republican leadership to demands from Northeast congressmen, and even the White House, for prompt action on aid to victims of Hurricane Sandy.

The next step is House floor consideration of two bills providing additional aid to states hit by Sandy. Debate will take place Jan. 15.

One is a bill crafted by Rep. Hal Rogers, R-Ken., chairman of the House Appropriations Committee, which would have provided $27 billion of supplemental aid to Sandy victims, including the increase in NFIP borrowing authority.

The other was a bill passed 89-8 by the Senate last Friday that would have provided a total of $60.4 billion in aid, less the $9.7 billion in borrowing authority provided by H.R. 41.

. The strong “no” vote from Republicans on even the loan piece indicates that the size of further congressional aid for victims of Superstorm Sandy cannot be predicted.

One of the reasons the House acted was that it received a message from the Federal Emergency Management Agency late Wednesday indicating that the funds need to pay claims from Superstorm Sandy and other NFIP obligations would run out sometime early next week.

As noted by Andrew C. Harris, president of the National Association of Professional Insurance Agents, “Not paying valid claims is simply not an option.”

Harris said, in comments echoed by other insurance industry officials repeatedly to members of Congress, “The federal government has both a legal obligation and a moral imperative to pay to indemnify policyholders for their covered flood losses in policies backed by the NFIP.”